Exchange-based scrap ferrous metal trading and hedging options are available, but the steel and scrap industries are still slow to adopt them.

CME Group, a commodity trading platform located in the United States, and the London Metal Exchange (LME) located in the United Kingdom, have provided ferrous metal scrap contract transactions for five years or more. Although there are some monthly activities in these contracts, CME and LME believe that the transactions and hedging volume related to them may be disappointing because the steelmaking and ferrous metal scrap recycling communities have not yet made hedging as part of their daily work.

In 2017, with the introduction or repackaging of some of these contracts, Recycling Today talked with Nathan Fruchter of Idoru Trading, based in New York, on the prospect of the ferrous metal industry following the non-ferrous metal industry in adopting hedging. Four years later, we re-contacted this veteran trader and advisor to learn about his views on the current and potential future status of ferrous metal hedging.

Nathan Fruchter (NF): Statistics from the LME show that between 2016 and 2019, the volume of transactions related to its scrap steel contracts has increased. Unfortunately, the trading volume of 280,600 lots in 2020 is down by 13.5% compared to the 324,500 lots in 2019. I am going to assume that this may be the result of the COVID-19 crisis. Generally speaking, it is regrettable that the trading volume of ferrous metal futures scrap lags behind that of mature non-ferrous metal contracts. (Editor's note: In 2020, the LME futures market will have more than 60 million high-grade aluminum transactions, more than 30 million copper transactions, and more than 20 million zinc transactions.)

I think the purpose of this contract is to provide a hedging mechanism for scrap metal recyclers, traders and steel mills so that they can reduce their exposure to unsold inventory and open contracts based on price changes. The ultimate goal is that the industry will one day use LME prices as a benchmark for physical ferrous scrap contracts, as is the case with copper, aluminum and other non-ferrous metals. But I don’t think this will happen soon. I really don't know that spot steel scrap contracts sold to Turkey or elsewhere are priced based on the LME Turkey contract. If I am mistaken, then I dare to say that this is a rare exception, probably to test the waters.

NF: I haven't heard a large-volume metal recycler or trader say to the steel mill during the negotiation, and vice versa, "Let's set the price based on the LME."

NF: Ferrous scrap is completely different from non-ferrous or non-ferrous scrap. LME or Comex hedging is the gene of every non-ferrous metal trader. Unfortunately, it is not part of the DNA of ferrous metal traders, so people of ferrous metals are not really comfortable with it or familiar with the process. Their approach is also very fixed.

NF: I totally agree with this idea. I have met many young, talented, and talented traders who think so; but many young people are also the children of their parents, and they will eventually take over their business one day.

More importantly, the field of non-ferrous metals is different from the field of ferrous metals. First of all, the quality or specification of LME non-ferrous metals is exactly the same. It either meets the specification or it does not. It can be stored in an LME warehouse anywhere in the world, and the ownership of one buyer can be changed to the next, just by emailing it without leaving the warehouse.

This is not the case with ferrous metal scrap. For many derivatives traders who are not familiar with the inherent characteristics of black scrap, heavy melting scrap (HMS) No. 1 and No. 2, 80/20 goods are: 80% of No. 1 HMS and 20% of No. 2 HMS. But in fact, this is not the case.

Take 10 respected waste recyclers as an example. Arranging each 500-ton waste pile in a row, you will have 10 different waste piles and 10 different inspection reports issued by the same inspector. A pile will contain many steel mills who do not want to cut rebar in their furnaces. The other pile will contain a lot of lightweight materials, that is, more HMS No. 2, and the seller will use some additional heavier materials to upgrade the quality. The other pile of compressed and sheared material will be heavy. There will be cast iron or some railroad scrap in the other piles, which some steel mills don't want (however, others don't mind). I haven't even begun to study dirt and dust content, other impurities, oversized materials, or debris heavier than allowed.

NF: You have traders from financial institutions buying and selling futures. As far as I know, they do not trade in actual waste materials, that is, regularly buy goods from recyclers, then sell them and export them to steel mills. I think most of them have never sold and shipped 30,000 tons of goods. Then there are very few recyclers and steel mills, I mean very few people who support or want to be seen as supporting this, so they trade some tonnage every month, but their physical volume dwarfs their futures volume.

A respected Turkish steel mill known for supporting futures contracts recently pointed out that there are "obstacles" in the process. They complained about insufficient trading volume. Another observation from others is that the quoted price on any day is not similar to the actual sales price that ends that day of the same month. When I heard the news, I took a look and noticed that there was a difference of 30 to 40 US dollars in tonnage on April 8th.

NF: Scrap steel prices fluctuate between 50 and 100 US dollars in some years, and between 50 and 150 US dollars in other years. Every once in a while, we will see fluctuations of US$50 to US$250 as in 2020.

But this still hasn't changed the mentality of recyclers and steel mills. Before making some changes, I don’t think there will be much change in the future.

NF: Since I first came into contact with scrap ferrous metal futures in 2016, I have had such conversations many times. Their reasons include their very fixed approach and prefer to maintain the comfort of physical pricing elements rather than being unfamiliar with the hedging system. By the way, most buyers of these goods also showed the same lack of enthusiasm. In addition, the contract size of 10 tons requires many hedging lots to cover the typical 30,000 tons of Turkish cargo.

When I answered this question, the latest news from the Argus market flashed in my inbox, with the title "Turkish steel mills buying goods shipped on May 19", and it is only April 12th. Do you know how many LME lots are needed to cover this amount?

U.S. east coast export recyclers also sell scrap steel to the domestic market. Many of their sub-suppliers have a choice every month, which is to sell domestically to steel mills or exporters’ yards or terminals. Export recyclers will not purchase waste that enters their yard under the LME. So why should he sell it on the basis of the LME?

When the dealer sends the feed to the yard, he does not necessarily know whether the ton of feed is exported or sold domestically. The idea here is: What are the benefits of LME-based purchases if they are sold domestically?

When it comes to the domestic market, CME Group has contracts for the Midwest bushels and shredded scrap. Suppliers who sell only or most scrap steel to domestic steel mills in the United States are more able to use CME futures contracts than ordinary export recyclers, who will look at the LME Turkey HMS contract.

Many people don't realize that just because the US domestic market rises by US$20 to US$30 in any given month does not mean that Turkish CFR prices have risen that much. Sub-suppliers who can choose to sell their scrap to steel mills or exporters do not pay attention to the LME's offer in its Turkish CFR contract. For him, this is the choice he can get from steel mills or exporters. For some people, this is never an option: it is always one or the other, depending on their distance to the steel mill and export terminal and transportation costs.

NF: I dare not set a target number for increased activity in any time period, but I see some advantages of these black futures contracts, and I am willing to use my knowledge to try to help solve this problem. I have some ideas how and where to make changes.

I actually look forward to the LME launching its Taiwan container contract, and hope it can be launched more easily, because I think it will be more conducive to hedging black scrap. Compared with Turkey’s current bulk cargo contracts, it will also attract more ferrous scrap recyclers, traders and steel mills. Compared with bulk transportation, container transactions have more participants and smaller physical contracts, so hedging does not require that many lots.

NF: It has been more than five years since people tried to trade ferrous scrap futures in the environment established for non-ferrous metals. Why must it be the same as non-ferrous metals? Why not review the rules of this game and the process of the entire ferrous metal scrap platform, and make adjustments in a way that better serves industry users? I think that to make it really work as expected, it takes a lot of bridges and listening to the other side's opinions. But this is not impossible.

Nathan Fruchter is the owner of New York-based Idoru Trading Corp. and can be contacted at nfruchter@me.com.

DJJ strengthens its safety culture by focusing on P-SIF (potentially serious injury and death), which is a process-oriented method of preventing workplace injuries.

David J. Joseph Co. (DJJ) in Cincinnati formally established the process of preventing potentially serious injuries and deaths (P-SIF) in 2016, which was launched in 2015. These events may lead to injuries or deaths that may change lives if the situation is slightly different.

"Many studies, especially the BST/Mercer study published in 2011, have concluded that long-term efforts to reduce the number of less serious incidents to effectively reduce the more serious consequences are not necessarily correct,” McWater said.

He continued, "The precursors and causal factors that lead to less serious events are different from those that lead to P-SIF. This is evident in the research, and we have seen the same situation when trending our event experience in DJJ. "

The Heinrich Triangle was introduced in the book "Industrial Accident Prevention: The Scientific Method" written by William Heinrich in 1931, claiming that focusing on hazards and first aid incidents can reduce deaths and lost work injuries. However, this method has recently been criticized by some safety experts, saying that it oversimplifies the relationship between danger and serious accidents, and some people also say that it puts too much responsibility on workers.

"From a workplace safety perspective, we must go beyond the traditional methods shown in the Heinrich Triangle and prioritize SIF prevention," McWatt said.

In addition, he said that just because the company did not have recordable incidents within a certain time frame, it does not necessarily mean that unsafe behaviors and critical situations did not occur.

The interaction between mobile devices and pedestrians is a key risk area for recovery operations. "Sadly, pedestrians hit by mobile devices are the main cause of death in our industry. You can understand this possibility by observing the activities in recycling facilities," David J. Joseph's corporate security director Terry Terry McWhorter. DJJ), Cincinnati, say. "We also face the additional challenges and responsibilities of separating customers from mobile device activities and protecting them on-site."

More than five years ago, DJJ formally developed a process for preventing potentially serious injuries and deaths (P-SIF), which involves checking the actual and potential results of safety incidents, as well as identifying and addressing precursors that may lead to serious injuries or deaths.

McWhorter explained how the company had a near accident at one of its locations a few years ago, which involved a front-end loader that was moving scrapped cars. The driver happened to catch a glimpse of a safety helmet on the other side of the scrapped car on the path of the loader. He stopped the loader, put down the load, and noticed a person walking across the scene.

He said: "This was a near miss because the pedestrian was on the path of the loader moving forward."

He said that in order to prevent this from happening again, DJJ not only pays attention to the behavior of drivers and pedestrians, but also pays attention to other activities that are taking place in the area. McWhorter said that in addition to car processing, the area also has large-capacity storage tanks for refueling equipment, which means that all other mobile equipment operating at the location comes to the area for refueling. Containers that receive scrap are also in the area, and trailers and other third parties frequent the area.

In response to the risk, DJJ reconfigured the area to limit it to automotive processing. Bulk containers for storing fuel and containers for waste materials were relocated. McWhorter said that better delineation of car handling areas can help eliminate the possibility of interaction between mobile devices and pedestrians.

He said that although workplace safety has behavioral factors, these behaviors are usually the result of decisions influenced by other factors. McWhorter said that although employees still need to understand the operating environment, if the DJJ can implement active control and eliminate the possibility of interaction, this is the company's goal.

Adding active controls to prevent accidents is only one aspect of SIF prevention. "Once we implement corrective measures, we must ensure that they are effective in the future," he said, adding that DJJ made and communicated the changes it deems necessary.

Instead, SIF prevention focuses on actual and potential results, and prioritizes addressing precursors that can lead to serious injury or death.

In order to determine whether an event meets the conditions of P-SIF, McWhorter said that DJJ will look at the actual results and compare them with the potential worst-case scenario.

"Then let's see what prevents the worst from happening," he said. "Which safety systems and control measures have been designed, and which have failed? If all controls have failed, and a small amount of luck such as time or location prevents a more serious result, this is obviously P-SIF. If a safety control measure is maintained Put in place and prevent the worst from happening, then the potential of SIF is high. If there are still multiple security controls, we will try to avoid stringing multiple'hypotheses' together."

McWhorter said that DJJ will also consider whether SIF is "possible" or "possible." He gave an example: "If I walk on the sidewalk, trip and fall to the ground, I may suffer serious life-altering injuries, but the probability is very low. On the contrary, if I fall from a 10-foot work surface , The possibility of it being SIF is very high."

McWhorter said that DJJ has identified 12 key risk categories for SIF prevention. He added that many of these risk categories apply to industries other than waste recycling, including high-altitude operations, hazardous energy, machine protection, falling/splashing materials, work around trucks and trailers, and torch and high-temperature operations.

McWhorter said that, especially in the recycling industry, mobile devices and pedestrian interaction are a key critical risk area. "Sadly, pedestrians hit by mobile devices are the main cause of death in our industry, and you can see this potential by observing the activities in recycling facilities," he said. "We also face the additional challenges and responsibilities of separating customers from mobile device activities and protecting them on-site."

McWhorter added that although P-SIFs are "reactive" because they are a response to an incident, they can help reduce risk by thoroughly investigating the cause.

McWhorter said that investigations play an important role in identifying and resolving P-SIF. Although most accidents are attributed to employee behavior, he explained, “These behaviors are usually the result of decisions that are affected by equipment layout, environment, management systems, or other cultural factors.” For this reason, eliminate hazards or When possible, implementing engineering controls can reduce the chance of making wrong decisions, he added.

Each location of DJJ (over 60) has trained the core team of incident investigation, which includes members from management and timing team members from different departments, which ensures a more thorough investigation because they bring different tasks to the task Perspectives, skills and knowledge.

"[We] also have a P-SIF review team, composed of senior leaders from operations, safety, engineering, and law, who will review all findings, ask appropriate questions and approve the investigation before distribution," McWater said .

As a result of these investigations, DJJ has established control measures for the 12 P-SIF risk categories identified by the company in its operations.

He said that once the P-SIF investigation is completed, the DJJ will create a P-SIF alert, which contains a description of the P-SIF, investigation results, corrective actions, and supporting photos and even videos. McWhorter said: "The alert will then be distributed throughout the organization through specific follow-up actions."

"In most cases, corrective actions must be implemented in similar processes in other locations," he added. "We have also designated it as an action item in our electronic EHS (Environment, Health and Safety) management system, so we can track progress."

"This is an iterative process," said Chris Bedell, DJJ's senior vice president and general counsel. "It's not static."

Bedell said that DJJ is interested in sharing the root causes and corrective actions of its implementation with the wider recycling industry. He also serves as the co-chair of the Safety Operations Committee of the Waste Recycling Industry Association (ISRI). He said that one of his main tasks in this position is to educate the industry about what P-SIF is and why they are so important.

In addition, McWhorter said that a follow-up meeting at the location where the P-SIF occurred will verify whether the corrective actions are effective in reducing the risk. If changes are deemed necessary, the location will advise the entire organization on the content of these changes.

Since DJJ formally formulated its SIF prevention plan in 2016, the company has been tracking its P-SIF rate. "We include this rate in our report along with our recordable, DART (leave, restrict or transfer) and lost work rate, but emphasize the P-SIF trend," McWhorter said. "Like many others, we have seen our accident rate have been declining over the years, but we need to recognize that the precursors are different and avoid complacency."

Bedell said that SIF prevention is an important part of the DJJ culture, which is built on four core values: safety, respect, integrity and excellence. He said that as part of Nucor Corp. headquartered in Charlotte, North Carolina, DJJ also accepted the overall corporate challenge of becoming the safest steel recycling company in the world.

"We firmly believe that there are many benefits to being a safe organization," Biddle said, referring to improved team, community, and customer relationships. "Excellent security leads to excellent business."

The author is the editor of Recycling Today and can be contacted at dtoto@gie.net.

The Revolution in Little Rock, Arkansas is expanding its influence as a provider of closed-loop sustainable solutions.

From day one, creating sustainable solutions has been part of the revolutionary story.

In the early 1990s, the founders of Delta Plastics, a manufacturer of agricultural low-density polyethylene pipes or polytubes, based in Little Rock, Arkansas, discovered the needs of their communities. Every growing season, farmers use polypipes to irrigate their fields. However, because plastic pipes can only be used for one growing season, the founders of Delta realized that farmers in Little Rock and its surrounding areas accumulate a large amount of plastic pipes every year, which cannot be recycled.

Delta stepped in to recycle materials accumulated on farms in the area and established the recycling company Revolution Plastics. Today, these two companies and others operate under the umbrella company Revolution.

"[Revolution] was established to solve the problem of plastic waste accumulated on the farm," said CEO Sean Whiteley.

Establishing this practical solution for polytube ultimately prompted the company to provide recycling solutions for other types of plastic waste (including agricultural films); garbage bags; tote and reusable bags for food service, retail and grocery; And industrial/commercial films.

Revolution is one of the largest recyclers of heavily polluted plastics in the United States, capable of processing more than 150 million pounds of materials each year. Since 1998, the company has recycled more than 1.5 billion pounds of plastic.

"We are the largest recycler of heavily polluting agricultural plastics in North America and one of the only companies in the world with a truly closed-loop business model," Whiteley said. "We have our own production plant to produce agricultural film. Once used by farmers, we will have our own professional fleet to collect the used plastic and transport it to our cleaning plant. Then, we use our proprietary The cleaning system is used to clean and granulate the film, and then we use it to re-manufacture new products. We manufacture, collect and recycle-a true film-to-film solution."

Revolution's agricultural brands include Delta Plastics, Revolution Ag and Revolution Board; its industrial and commercial brands include Revolution Bag, Rodeo Plastics, Polar Plastics and Jadcore; its consumer brands include Command and Dailygood Bags. The company also sells Encore-certified post-consumer resins (PCR).

"We continue to expand further," Whiteley said. "This is the true way of business development-everything is centered around the prism of closed-loop, sustainable solutions," he continued.

Throughout the company's history, Revolution has expanded to include a variety of brands and products-from plastic tubes and agricultural films to industrial and commercial films, to tote bags and reusable bags.

One might wonder how a company that recycles and manufactures multi-tube irrigation can also engage in the business of manufacturing commercial garbage bags. Whiteley said that creating sustainable solutions for end-of-life plastics is what connects these different products. "We have a core set of closed-loop product lines. We produce, sell, use, collect, and recycle products, and then re-manufacture the same products using some recycled materials."

Whiteley said Revolution's agricultural film products use an average of 20% to 40% PCR.

"We can only use part of it to make new products again," he said. "This means we have a lot of resin, recycled materials, and we can use it for other purposes."

The unrecyclable resin is made into plastic pipes again, and Revolution produces garbage bags and other products. Whiteley said Revolution's trash bag lining products contain 70% to 100% PCR.

"So all these product line extensions are ways we can use PCR to solve historically not-so-green markets," he said.

Cherish Miller, vice president of sustainable development and public affairs at Revolution, said the company can produce more than 150 million pounds of PCR each year.

For many years, the company has mainly sourced materials from the agricultural sector, but in recent years, Revolution has begun to look for other sources of materials. "Last year, we have been focusing on adding release films to our recycled products," she said. "We have also cooperated with some retailers on store drop-off movies. These two areas are areas where we continue to seek expansion."

Growth is the key goal of the revolution. To this end, Whiteley stated that the Thompson family, the former ownership of Revolution, decided to sell the business to Arsenal Capital Partners, a private equity and investment company based in New York, in July 2019. Arsenal invests in specialized industrial and healthcare companies in the mid-market. The company obtained revolutionary controlling rights, and the Thompson family retained ownership.

The company’s former major shareholder, Dhu Thompson, said in a statement on the transaction: “The architectural revolution has always been one of my life’s passions. I believe we have found a partner who will continue to maintain our Values ​​and protect the identity, reputation, customer relationship and culture that we have established over the past 25 years. The foundation of our company is to find ways to do things that others think is impossible. For many years, we have been creating closed-loop recycling systems in the agricultural sector and manufacturing others Sustainable plastics have a PCR content of up to 97%."

He added: "By working with Arsenal, our past is only the beginning of what we have achieved in the market."

"We need an equity partner, an investment partner, which will enable us to truly achieve the next level of growth and expand our network, our operations and our services," Whiteley said of the sale. "So Arsenal came in as an additional investor to help us fund this growth."

He added that Arsenal have fulfilled their promise to the revolution to fund and stimulate additional growth. Since Arsenal took over the revolution about two years ago, the company has invested US$20 million to expand its Little Rock headquarters and added cleaning and recycling capabilities in Stuttgart, Arkansas.

"Our focus is to use as much post-consumer resin as possible in all the products we produce, and this investment will allow us to add this to our architectural films, sheets, and agricultural films," Miller said The expansion of Little Rock.

She explained that Revolution is adding two blown film production lines that can produce more than 40 million pounds of film products each year. "This new capacity is dedicated to the manufacture of films containing a large amount of post-consumer recycled plastic, which is the cornerstone of Revolution's unique manufacturing model."

Miller added that the expansion of Little Rock will be completed this year.

Since Arsenal acquired a majority stake in the business, Revolution has also acquired three other companies: Pak-Sher in Kilgore, Texas, now part of the Revolution's Command brand; Polar Plastics, a company in Oak, Minnesota Dyer, a manufacturer of blown plastic film and bags; and Jadcore, a post-industrial recycling company in Terre Haute, Indiana.

"All these [acquisitions] are possible because of the contribution of the Arsenal team-not only financial, but also analysis and insight," Whiteley said.

He said that through acquisitions, cultural consistency is essential.

Whiteley said that after acquiring Jadcore in February this year, Revolution ensured that the two companies have similar cultures in terms of how they reach customers, communities, and employees, as well as similar business models. However, he said that Jadcore offers a completely different product portfolio.

"They focus on post-industrial recycling content; we focus on post-consumer recycling content," Whiteley said. "All of this needs to be recycled, but the material flow is a bit different. This supplement is great. They recycle more than 100 million pounds of material each year."

Nova Chemicals Corp., headquartered in Calgary, Alberta, announced in December last year that it would start selling post-consumer resins (PCR) produced by Revolution in Little Rock, Arkansas. Through an exclusive partnership, Nova will sell Revolution's recycled low-density polyethylene (rLDPE) and recycled linear low-density polyethylene (rLLDPE), which will expand Nova's PCR product portfolio.

Anna Rajkovic, Circular Economy Manager at Nova Chemicals, said that until recently, the company has been a "strict virgin resin producer." She said that Nova started to formally formulate a circular economy strategy in 2018, which includes the distribution of PCR.

Through this new partnership, Nova will provide a variety of rLDPE and rLLDPE grades with different melt indexes and densities from Revolution. These grades are suitable for flexible packaging applications; shrink and stretch wraps; agricultural films; polyethylene mail and pouches; and a range of molded products.

Cherish Miller, Vice President of Sustainability and Public Affairs at Revolution, added: “We think Nova has done a great job in application development. Nova’s technical expertise has always been an excellent way to increase the number of PCRs used in the market. We are really very excited. Focus on figuring out how to continue to recycle as much plastic as possible. Nova has the right skills and capabilities to apply PCR to applications beyond our scale and technical expertise. We believe in the cooperation between resin companies and companies like us More and more. It is helping PCR in the entire market."

Rajkovic stated that PCR will become a more "important" part of Nova's future business. "In order for our customers, the processor community, to help brand owners achieve the goal of PCR integration, they will need more materials, more expertise, and the ability to have our one-stop concept of raw materials, recycling Materials and expertise in designing it and closing the loop," she said.

In the past three decades, Revolution's number of employees has grown from dozens to nearly 1,200 full-time employees. Whiteley added that the company has a production base in Little Rock. Terre Haute; Oakdale; Kilgore; Mesquite, Texas; and the collection points in Vernon, California and Stuttgart; Madison, Wisconsin; Salinas, California; and Trey Hult.

Miller said that even with growth, Revolution managed to maintain the feeling that the family had from the beginning,

"This is a challenge," Whiteley said. "We spend a lot of time, money and resources to ensure that we maintain that family feel and have the ability to make an impact on one's voice. This is important to us."

He explained: "We spent a lot of time to ensure that great ideas penetrate. No matter whose idea is mine, it is my idea or a brand new line operator."

For example, he said, an employee helped launch a new agricultural film collection program for more rural customers.

"Some areas of the country don't have enough capacity to place trash bins to collect materials; farmers in the upper Midwest cannot participate in our recycling program because they don't have enough numbers," Whiteley said. "One of our colleagues came up with an idea. If we make a very large, thick garbage bag that is 10 feet long and 6 feet wide, these farmers can keep and fill it up instead of putting one of our garbage bins there. . They are filled with five such bags, which is enough for us to pick it up.

He added: "These are innovations, and there are countless [numbers] among them, which shows that our employees are our greatest asset."

Sustainability drives the company's growth, and Revolution plans to continue to expand its PCR sales and sustainable solutions portfolio.

Miller said that because trust in Revolution products is important, the company has joined the Plastic Recyclers Association's PCR certification program and has certified PCR in its final products through SCS Global and AM Testing.

She added: "Our brands have come together, and they care about the environment." "As a company, we are achieving sustainable development through cooperation within and outside the industry. We care about people and the environment, and we know all of us All need to find truly sustainable solutions for the future." 

The author is the executive editor of Recycling Today and can be reached at msmalley@gie.net.

Revolution, 800-277-9172, www.revolutioncompany.com

As the global vaccination rate rises, steel manufacturers and ferrous metal processors expect global demand to increase accordingly.

Experienced ferrous scrap recyclers have experienced a lot of supply, demand, and price fluctuations, but the pandemic-related market conditions are uncharted territory for them even in 2020. Since March last year, COVID-19 and related workplace restrictions have been a major impact year on the market, but the introduction of vaccines may eventually end that era.

However, waiting for the last two thirds of the scrap market in 2021 is still related to the pandemic, because domestic and global demand for steel will largely depend on how household consumers, companies and governments spend and invest to make up for it. The "waste of time" caused by COVID-19.

Based on rising steel production levels, government stimulus plans and suppressed household consumer demand, if scrap processors can collect suitable material supplies in 2021, it is likely to bid on the global steelmaking market that requires scrap steel. .

U.S. and global trade associations have been providing data confirming the local experience of many scrap processors: steel mills have been increasing production capacity in response to the rebound in government infrastructure spending and household consumer spending.

As the global economy reopens (even with distance restrictions), steel demand will begin to rise in the second half of 2020 after bottoming out in April and May.

Steel production data collected by the Washington-based American Iron and Steel Institute (AISI) and many of its overseas counterparts indicate that steelmaking will continue to rebound in the first half of 2021.

With the introduction of the vaccine, consumer (and some investors) optimism has risen further. In the metal industry, President Joe Biden's government proposed to invest up to US$2 trillion in US infrastructure projects, which also boosted optimism.

In recognition of Biden’s plan, AISI President and CEO Kevin Dempsey stated, “Every $1 billion in infrastructure spending requires approximately 50,000 tons of steel, and every $1 trillion in infrastructure spending requires approximately 50,000 tons of steel. Investment has the potential to create 11 million jobs in our economy. The next decade."

Other steel and scrap consuming countries, including Mexico and India, have also proposed infrastructure spending plans to ensure that their respective GDPs return to their pre-COVID-19 levels and unemployment rates fall.

*The purchase price of No. 2 shredded steel with a copper content of 0.17 or higher per ton of steel mills; source: MSA Inc.'s RMDAS service, http://rmdas.msa.com.

China is one of the few countries where steel production may decrease in 2021, but not all industry observers think this is bad news. The country is accused of producing more steel than its consumption, and the country’s managers also stated that they want to switch from emissions-intensive alkaline oxygen furnace (BOF) production to more environmentally friendly electric arc furnace (EAF) production.

Whether the scrap steel produced in the US stays in the country or enters the hungry export market, its value so far in 2021 has exceeded the low prices faced by processors in 2019 and early 2020.

In the first half of 2021, the pricing tracked by Fastmarkets AMM and Pittsburgh-based MSA Inc.'s Raw Material Data Aggregation Service (RMDAS) has remained within a healthy range of US$430 to US$570. In contrast, pricing for most of 2020 will not be able to break the upper limit of $300 per ton.

The price also indicates a huge difference in value between the obsolete grade and the instant grade collected from the U.S. factory

This dichotomy mainly originates from the supply side rather than the demand side, and illustrates the concept of supply elasticity. According to Fastmarkets AMM survey pricing, the selling price of instant scrap at the beginning of April was US$138-164 per ton higher than the obsolete grade. This is largely due to the slowdown in automotive assembly activities due to semiconductor supply bottlenecks.

The same April survey showed that although the value of instant scrap rose another 2.5%, outdated shredded steel and No. 1 heavy melting steel (HMS) grades fell by more than 4% in April. This is due in part to the relatively active overall metal prices, which has brought sufficient quantities to the scale of the scrap yard.

The financial reports and statements of listed companies covering the first quarter of 2021 include Steel Dynamics Inc., an electric arc furnace steel manufacturer headquartered in Indiana. And recycling company Commercial Metals Co. also reported "record core earnings" during the quarter; Oregon-based recycler and steel manufacturer Schnitzer Steel Industries Inc. reported revenue and earnings for the quarter ended February 28 Both have increased.

The extent to which good times can last is always in the minds of scrap recyclers, who know that what goes up will always go down.

If mass vaccination helps put the economic factors of COVID-19 in the rearview mirror, steel manufacturers and scrap recyclers appear to be ready to become part of the mid-2021 market.

In a speech prepared for a private customer in Orlando, Florida in early April, Becky E. Hites of Atlanta-based Steel-Insights LLC predicted that as orders catch up with demand, hot-rolled strip prices may "in midsummer [ Decline before 2021]; before then, prices are likely to continue to climb."

Despite the COVID-19-related disruptions and after four years of Presidential Administration’s efforts to redefine trade relations, the United States continues to export ferrous scrap to the rest of the world in 2020.

Data collected by the U.S. Department of Commerce and compiled by the U.S. Geological Survey shows that, compared with the previous year, U.S. exports of ferrous metals decreased by 4.5% in 2020.

Taking into account the scarcity of scrap supply in the United States for most of last year, the relatively modest decline in exports indicates that the demand for ferrous scrap in the rest of the world is healthy-even during the pandemic.

Turkish steel mills are still the largest buyers of American scrap exports, purchasing more than 4 million metric tons of materials in 2020. This is a slight increase compared to the 3.9 million tons shipped there in 2019.

Compared with 2019, the purchase of American scrap iron by neighboring countries Canada and Mexico in 2020 decreased by about 6.5%, from 3.17 million tons in 2019 to 2.96 million tons in 2020.

The buyer with a significant increase in 2020 is Malaysia, whose 1.58 million metric tons are 73% more than the less than 90 metric tons purchased in 2019.

On the downside, due to the strict restrictions imposed by the government in the past two years, China is actually no longer a buyer of American scrap iron. In 2019, it only imported 61,000 metric tons and in 2020 only 45,000 metric tons.

The consultant said that there is still room for growth in domestic production. AISI reported that the factory operating rate in early April was 77.9%, and Hites said it was “below the 80% target benchmark”.

She said that a healthy domestic market is always good news for recyclers, because the U.S. scrap steel EAF market share accounts for 71% of its steel production, making it one of the countries with the highest market share in the world.

The U.S. steel industry, which is responding to the market, also has room for growth because it has idled furnaces more than other countries in response to COVID-19. Hites predicts that global steel production will increase by 3.3% in 2021, but compared with 2020, US production will rebound by 23%.

Any broader economic factors (inflation), domestic government issues (stalemate or debt issues), or geopolitical environment (East Asian or Ukrainian confrontation) overwhelm the optimism of investors and household consumers. However, as of April, scrap dealers and steel manufacturers have reason to believe that they will remain profitable in 2021.

The author is a senior editor of Recycling Today Media Group and can be contacted at btaylor@gie.net.

United Scrap Metal, located in Cicero, Illinois, prioritizes employee training and development to achieve its goal of continuous improvement.

Some workplace cultures are endured by employees; others celebrate. Brad Serlin, president of United Scrap Metal, based in Cicero, Illinois, said his company falls into the latter category.

“By fulfilling our mission and having a positive impact on the lives of others, the company has made considerable progress in the past 43 years,” he said. "This applies to our internal team members, customers, consumers and communities. Our core values ​​of trust, commitment, loyalty, enthusiasm and performance are the foundation of our business. There is also a vision for our future, which inspires all team members Continue their career path."

Leadership: Founder and CEO Marsha Serlin, President Brad Serlin, Chief Operating Officer Jim Sause, Vice President Jodi Keller, and Chief Financial Officer Mike Mitchell

Locations: Headquartered in Cicero, Illinois, with additional offices in Philadelphia; Richmond, Virginia; Charlotte, North Carolina; St. Louis; and Indianapolis

Services: United provides waste management services for manufacturing, utilities, construction and demolition companies. The company also has a recycling center in Cicero's office to provide procurement services for the public. All six of the company's locations process waste materials that are shipped directly to factories and foundries.

Equipment: baler, briquetting machine, compactor, crumpling machine, shredder, magnetic separator, shearing machine and wire stripping machine; wire processing plant; 5,000 roll-on boxes and suitcases; trailers; flat bed ; Gondola trailers; and a huge truck fleet, in addition to special contract transport vehicles, double the number of trucks United Airlines deploys every day; consumer goods are also transported by rail and barge

"United Nation" (the company's 525 team members call United Scrap Metal) consists of 6 yards. In addition to its location in Cicero, United also has facilities in Philadelphia. Richmond, Virginia; Charlotte, North Carolina; St. Louis; and Indianapolis. "These are large, self-sufficient regional operating organizations that provide services to businesses and industries while delivering factories directly," Brad said.

Brad said that in total, the company has 800,000 square feet of roof space on 175 acres of land and can process 410 million pounds of non-ferrous metal scrap (205,000 tons) and 200,000 gross tons of ferrous metal scrap each year.

He said that most of United's customers are manufacturers and service centers, which account for more than half of its purchases. The utilities, demolition, and construction departments supply the rest of United's inventory.

United's Cicero location also operates a recycling center that purchases materials from the public. Brad said that this kind of retail trade only accounts for a small part of United's overall business, but it can meet the needs of many local customers.

He said that the company's material portfolio is more biased towards non-ferrous metals in design. When his mother, CEO Marsha Serlin (Marsha Serlin) founded the company in 1978 with a rented truck and $200 in her pocket, she understood that a copper Gaylord might be better than one. Truck steel is more valuable. "It's lighter, less capital intensive, and more profitable," Brad said of non-ferrous metals.

He said that by 1980, United was operating three trucks, and by 1981, the company had added a 10,000-square-foot building on the leased acre of land. In the late 1980s and throughout the 1990s, in addition to its acquisition of RPS Industrial Metals in Franklin Park, Illinois in 1997, United also expanded its operations in the Chicago area. In the same year, United Airlines increased its wire pelletizing capacity through the purchase of turnkey equipment. Part of the funding for the system came from a grant from the Illinois Department of Economic Opportunity. At the same time, it built an additional 40,000 square feet of processing space in Cicero, which is still so far The largest position so far.

Brad Serlin, president of United Scrap Metal in Cicero, Illinois, said the company has innovated in providing recycling solutions for customers in manufacturing, utilities, construction, demolition and service centers. "Our comprehensive assessment of all aspects related to our customers includes material handling, logistics, waste reduction, sustainability, commodity market trends and overall risk management."

The company’s founder and CEO Marsha Serlin added: “Our formula for success is not overly complicated; it listens to customers and is not afraid to ask questions to better understand their specific needs.”

Manchester United also stands out in other areas. Brad stated that the company has established itself as an "award-winning leader in recycling solutions," with more than 50 awards ranging from entrepreneurship to philanthropy. These include the “101 Best and Smartest Companies for Work” as well as the Ernst & Young Manufacturing Entrepreneur of the Year Award from the CEO and founder Marsha Serlin and the Metal Industry Women’s Association Company of the Year Award.

Marsha also won the Arnstein & Lehr Women of Vision Award. In the same year, United was listed by Crain's Chicago Business as one of the 50 fastest growing companies in the Chicago area.

By 2010, United Airlines was listed as the fifth largest female-owned company in Chicago and one of the largest private companies in the city.

United Airlines is also recognized as a top supplier to companies such as Alcoa, Aurubis, Luvata and Olin Brass.

Although United’s focus is on non-ferrous metals, Brad said, “Our growth and positioning require us to develop the ferrous metal business.” The company strives to become a “one-stop shop” for customers, which he said requires United to be proficient in all scrap metals and non-ferrous metals. Metal goods. 

He said that most of the company's geographic growth occurred in 2012, when it added locations in Philadelphia to meet the needs of one of its main suppliers.

"Expanding our footprint is not easy, because the unknown will never make people comfortable, although we feel that it is time to meet new challenges," Martha said. "We believe that the agility of organizational change has always been our strength, so why not take the business to a new level outside of our regional comfort zone."

From 2014 to 2018, United Airlines added one more location each year, opening green spaces in Richmond, Charlotte, St. Louis and Indianapolis in turn, each of which has existing major customers. The company's smallest site is 10 acres, while its Cicero site is 75 acres.

Brad said that all of United's facilities process materials and the goal is to ship finished products directly to the factory. "These sites are not transfer locations."

He said that Cicero's team members have moved to new locations to ensure that the company's core values ​​are reflected, and that each location has its own sales team.

Brad said the transition to these new markets was "seamless" with the help of the relocated team members. "Manchester United's most valuable products are our employees, the investment and belief in our team."

During the job interview, United asked potential team members if they would relocate.

He said that because only two members of the Serlin family are involved in the business, opportunities like this create ideal growth prospects for team members. Brad said that United Airlines prioritizes traits and attributes when recruiting, which is usually outside the industry. Many former high school and college athletes and coaches work for the company. He said that the structure and discipline they embodied are the ideal attributes of United Airlines, just like their public service.

In fact, the company will ask potential employees how to give back to their community during the interview.

"We want to make sure they understand the importance of giving back," Brad said. "Being part of the solution and participating in the community is our business responsibility. It really helps to motivate our team."

He said that although potential employees in the recycling industry have connections and knowledge, they are only part of the company's success equation. "What makes them successful is their characteristics and attributes."

Brad added that the company looks for people who are "hungry, humble, and smart" and capable of interacting with people. It also encourages employees to recommend job candidates.

United worked with external recruiters and hired two recruiters in its personnel development department. Brad said that a female colleague was promoted all the way from operations to this role and had a deep understanding of the meaning of these positions.

Brad is proud of the prominent role women play in Manchester United. He said that women accounted for 30% of his workforce, and many of them held operational positions.

"Government regulation and compliance are a reality that is evolving at all levels of the industry," said Brad Serlin, president of United Scrap Metal in Cicero, Illinois. "We will continue to emphasize environmental and safety compliance, and all industry operators have the opportunity to improve their business scope."

He added that all six of the company's recycling facilities are ISO 14001 and Recycling Industry Operating Standards (RIOS) certified, which "provides an excellent roadmap for operating the business correctly."

RIOS was developed by the Waste Recycling Industry Research Institute in Washington. It is a comprehensive quality, environmental, health and safety management system certification designed specifically for recyclers. United is one of the first companies to receive this certification.

The RIOS management system provides a framework to monitor Occupational Safety and Health Administration regulations and ensure compliance with safer workplaces. It also creates a framework for the facility to monitor and ensure compliance with applicable environmental regulations, and allows the facility to evaluate its operations to develop auditable procedures to produce quality products.

United Scrap Metal uses a team interview process to allow job applicants to track employees throughout the day. Brad said: "At that time, we might decide that someone is more suitable for the other side of the organization."

He added that United Airlines prioritizes retaining employees. "We hope this is their long-term home. We are proud that we have a lot of team members taking their careers to levels they never imagined," Brad said.

To this end, the company created a leadership alliance about 10 years ago. Brad said that employees from different locations and different job functions of United Airlines participated in the one-year program. "It pays to watch them grow in the plan."

Marsha added: "I am proud of our team and [their demonstrated] perseverance in all aspects of life over the years. It is their qualities and attributes that make them successful."

Watching them grow personally and professionally is incredibly rewarding for the founders. "

In addition to prioritizing the professional development of employees, United Airlines also pays close attention to its performance indicators.

"We try to avoid complacency or contentment," Brad said. This means striving for continuous improvement throughout the organization by monitoring operational indicators and publishing performance targets. Brad points out, "What is measured is what is done."

He said that the number and level of daily movement is very obvious and promotes inventory turnover. "Inventory turnover creates a natural hedge," Brad said, providing isolation from the market decline.

"Our approach is to continue to emphasize timely handling and accelerating inventory flows," he continued. "We have never speculated or held materials because the market will always have an advantage over us. The game plan is minimizing the risks for our customers and organizations."

Brad added that United's lean operations help the company maintain profitability under all market conditions.

He said that the positioning of the recycling industry is to use the sustainable development movement to use scrap metal to reduce the energy required to make new metals, while minimizing dependence on mining. "Educating all stakeholders about the benefits of recycling is a key industry-wide initiative, and operators are obliged to do so."

Brad said that as recycling becomes more and more important, United may face growth opportunities.

"Every growth scenario, whether it is organic growth or through acquisitions, needs to be fundamentally adapted," he said, adding that the growth scenario must be profitable.

With geographic expansion, “we want to know whether the state is attracting new industries, what economic incentives can be adopted, and whether there are synergies between our customer base and quality workforce,” Brad said. "We don't believe that growth is just for growth. It must fit our business model."

The author is the editor of Recycling Today. You can contact dtoto@gie.net via email.